As Foxconn Deal Unravels, Lordstown Motors Warns Of Bankruptcy

Lordstown Motors Corp. may be forced to discontinue operations and file for bankruptcy after Foxconn informed the electric-vehicle firm that it is willing to withdraw from a production collaboration.

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The contract with Foxconn Technology Group might fall apart after the Taiwanese corporation threatened to withhold money, causing Lordstown to go bankrupt, the company said in a securities filing on Monday. Lordstown also stated that it was looking for alternate finance.

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"If we are unable to resolve our dispute with Foxconn in a timely manner on terms that allow us to continue operating as planned, identify other sources of funding, identify a strategic partner, and resolve our significant contingent liabilities, we may need to curtail or cease operations and seek protection by filing a voluntary petition for relief under the bankruptcy code," Lordstown explained.

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Foxconn representatives could not be reached for a quick comment. 

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At 11:17 a.m., Lordstown stock was down 29% to 37 cents per share. New York.

"Foxconn's actions are completely unwarranted," a Lordstown official stated after the market began. "Their actions have caused material — and potentially irreparable — harm to the company."

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The filing demonstrates how quickly the partnership has become destabilized amid the EV market's upheaval. Foxconn committed to invest up to $170 million in Lordstown and accept two board seats roughly six months ago. The agreement provided much-needed funding to the EV producer while also providing Foxconn, the Taiwanese company best known for producing Apple Inc.'s iPhone, with a stronger footing in automobile production.

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Foxconn also bought $230 million for a former General Motors Co. plant in Lordstown, Ohio, where it intended to produce Lordstown's first vehicle under contract. 

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However, in January, Lordstown asked Foxconn to halt production because the cost of producing the Endurance battery-powered pickup exceeded the target sale price of $65,000 — and stated that it would require a partner other than Foxconn to share costs. 

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Last month, the EV manufacturer announced that truck production had begun "at a very low pace."

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According to the filing, the two businesses are in negotiations to reach an agreement after Foxconn informed Lordstown that it may terminate its investment in as short as 30 days due to what it said was a violation of their agreement. Foxconn's decision was prompted by a Nasdaq warning to Lordstown last month that its stock might be delisted if it fell below a minimum $1 per share level for 30 consecutive days. 

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